Innovative Industrial Properties to Acquire Arizona Property and
Enter Into Long-Term Lease With The Pharm

The Company Expects to Invest Up to $18 Million in the 350,000+
Square Foot Medical-Use Cannabis Cultivation Facility

November 28, 2017 07:00 AM Eastern Standard Time

SAN DIEGO--(BUSINESS WIRE)--Innovative Industrial Properties, Inc. (the "Company") (NYSE: IIPR), the
leading provider of creative real estate capital solutions to the
medical-use cannabis industry, announced today that it has executed an
agreement to purchase a property in Arizona comprising over 350,000
square feet of greenhouse and industrial space in a sale-leaseback
transaction with a subsidiary of The Pharm, LLC ("The Pharm").
Concurrent with the closing of the purchase, the Company expects to
enter into a long-term, triple-net lease agreement with The Pharm
subsidiary, which intends to continue to use the facility for medical
cannabis cultivation. The Pharm is led by a senior management team that
brings decades of collective experience and a proven track record in the
medical-use cannabis, agriculture, food and beverage, finance and
e-commerce industries.

The purchase price for the property is $15 million. The Pharm
subsidiary, as tenant, is also expected to make certain tenant
improvements at the property after the closing of the transaction, for
which the Company has agreed to provide reimbursement of up to $3
million. Assuming full payment of the tenant improvement allowance, the
Company's total investment in the property will be $18 million.

The initial term of the lease is 15 years, with two options to extend
the term for two additional five-year periods. The lease provides for an
initial annualized aggregate base rent of $2,520,000, or 14% of the sum
of the purchase price and the tenant improvements made available to the
tenant, subject to an initial partial rent abatement. The aggregate base
rent is subject to 3.25% annual increases during the term of the lease,
and The Pharm subsidiary is also responsible for paying the Company a
property management fee equal to 1.5% of the then-existing base rent.

"The Pharm is pleased to enter into a long-term partnership with
Innovative Industrial Properties through a real estate sale-leaseback
transaction that will help capitalize our plans for national expansion.
Innovative Industrial Properties' flexible, long-term capital solutions
have enabled The Pharm to unlock the equity it had invested in real
estate to be redeployed back into our core business, where we expect to
generate higher returns," said Mr. Randy Smith, Founder and Chief
Executive Officer of The Pharm.

"The Pharm's team brings together decades of management and business
execution success, and we believe they are very well-positioned to
continue their strong growth in the Arizona medical-use cannabis market,
which as of October 2017 had nearly 150,000 registered patients being
treated for numerous qualifying medical conditions, including chronic
pain," said Paul Smithers, President and Chief Executive Officer. "We
are excited to have The Pharm as a new tenant and to support their real
estate and capital needs as they continue their expansion in the Arizona
market and beyond."

The transaction is expected to close in the fourth quarter 2017. The
transaction is subject to the Company's continued diligence and
customary closing conditions, and the Company cannot provide assurances
that it will close on the transaction on the terms described herein, or
at all.

About The Pharm

The Pharm is one of the largest wholesalers of medical grade cannabis in
the state of Arizona and serves 40 of Arizona's 99 retail dispensaries.
The Pharm is focused on cultivating the highest quality, organically
grown cannabis and cannabis-based derivative products tailored for the
treatment of specified medical conditions. The company's products, with
the retail trade brand "Sunday Goods," are available to state-licensed
patients in both dispensaries and online through the company's
e-commerce platform https://shop.sundaygoods.com/.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland
corporation focused on the acquisition, ownership and management of
specialized industrial properties leased to experienced, state-licensed
operators for their regulated medical-use cannabis facilities.
Innovative Industrial Properties, Inc. intends to elect to be taxed as a
real estate investment trust. Additional information is available at www.innovativeindustrialproperties.com.

Innovative Industrial Properties
Forward-Looking Statements

This press release contains statements that the Company believes to
be "forward-looking statements" within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All
statements other than historical facts, including, without limitation,
statements regarding the purchase and lease of the Arizona property and
the terms thereof, are forward-looking statements. When used in this
press release, words such as we "expect," "intend," "plan," "estimate,"
"anticipate," "believe" or "should" or the negative thereof or similar
terminology are generally intended to identify forward-looking
statements. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from
those expressed in, or implied by, such statements.Investors
should not place undue reliance upon forward-looking statements.The
Company disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.